The Joint Commission on Accreditation of Healthcare Organizations will be liable for more than $1 million in back property taxes unless it successfully appeals a recent state court decision that said an accrediting agency acts more like a business than a public charity.
The legal setback is the latest in a series of woes befalling the JCAHO, which also is facing growing criticism over the value of accreditation (July 18, p. 6).
In an eight-page opinion rendered last month, Judge Bonnie Wheaton of the DuPage County (Ill.) Circuit Court stripped the JCAHO of its property-tax exemption for its $23 million corporate headquarters, which opened in 1990. The JCAHO's Oakbrook Terrace, Ill., headquarters are located in DuPage County.
Judge Wheaton said the JCAHO's activities directly benefit healthcare facilities, not the public, and the organization generates "a substantial surplus of funds" from survey fees, not from any public or private charity.
In 1992, the JCAHO earned $3.4 million on revenues of $69 million. The organization's 1993 financial results aren't publicly available yet, but it had projected a $4.9 million profit on revenues of $86 million (March 14, p. 30).
The JCAHO, which says it serves the public interest by improving the quality of healthcare services, has appealed the decision to 2nd Illinois Circuit Appellate Court in Elgin, Ill. A decision is expected early next year.
If the JCAHO loses its appeals, it Would be liable for about $350,000 in annual property taxes dating back to 1990, county tax records show.
The dispute dates back to December 1990, when the JCAHO filed for an exemption from property taxes for its new headquarters building. In January 1991, the DuPage County Board of Review forwarded the JCAHO's application to the Illinois Department of Revenue with the recommendation that the application be denied.
However, the department approved the JCAHO's exemption application in May 1991. Villa Park (Ill.) School District 45 and the county board appealed to an administrative law judge.
Judge George Nafziger in May 1993 upheld the department's decision and the JCAHO's tax exemption. The county board and school district then appealed to Judge Wheaton, who reversed the decision.